LIBRARY 

OF  THK 

UNIVERSITY  OF  CALIFORNIA 

GIFT    OF 


Class 


Vested  Wrongs 


BY 


ROBERT  P.  PORTER 


An  address  read  at  the  Third  Annual 
Convention  of  the  League  of  American 
Municipalities,  held  at  Syracuse,  New 
York,  September  19-22,  1899  *  <*  *  + 


NEW  YORK 

Leonard  Darbyshire 

100  Broadway 

1900 


Vested  Wrongs 

By 

ROBERT  P.  PORTER 


An  address  read  at  the  Third  Annual 
Convention  of  the  League  of  Ameri- 
can Municipalities,  held  at  Syracuse, 
New  York,  September  19-22,  1899. 


NEW  YORK 

Leonard  Derbyshire 

WO  Broadway 

1900 


VESTED  WRONGS 

By  Robert  P.  Porter 

IT  is  now  nearly  twenty-five  years  ^ 
ago  since  I  first  took  up 
the  fiscal  problems  relat- 
ing to  our  states,  counties 
and  municipalities,  and 
twenty  years  since  I  was 
called  upon  by  the  United 
States  Government  to  write 
a  history  of  the  debt  of  each 
state  of  the  Union,  and 
prepare  a  report  on  the 
wealth,  debt  and  taxation 
of  our  cities  and  towns. 
The  result  of  those  inquir- 
ies may  be  found  in  Vol- 
ume VII.  of  the  Tenth 
Census  [i88o].f  Soon  after 
the  war  a  craze  set  in  for  municipal 
improvements,  similar  to  the  present 
epidemic  for  owning  and  operating  pub- 
lic utilities,  and  as  a  result  local  in- 
debtedness and  taxes  had  increased  so 
rapidly  that  in  many  instances  the  burden 
upon  the  taxpayers  became  almost  un- 
bearable, and  in  some  important  cities 
repudiation  was  publicly  advocated.  The 
alarm  occasioned  by  the  increase  of 
municipal  indebtedness  was  emphasized 
in  many  of  the  western  states  by  the 
large  sums  of  public  money  voted  to 

*  An  address  read  at  the  Third  Annual  Convention  of  the 
League  of  American  Municipalities,  held  at  Syracuse,  N.  Y., 
Sept.  19-22,  1899. 

fReport  on  Valuation,  Taxation  and  Public  Indebtedness 
in  the  United  States,  and  returned  at  the  Tenth  Census  (June 
1.  1880),  l»y  Robert  P.  Porter,  Special  Agent. 


aid  innumerable  private   railway   schemes, 
a    majority    of    which    had    not    come    up 
to  the  great   expectations  of  the  promot- 
ers and  had  left  the  unhappy  communities 
responsible  for  millions   of  unpaid  bonds. 
The  history  of  this  period  of  our  state  and 
local  fiscal  history  should  be  familiar  to  ad- 
vocates of  municipal  ownership  in  the  Unit- 
ed States.  If  not  they  will  find  much  official 
data    of  value    and    interest    in    the    vol- 
ume    referred     to,     which     has     a     prac- 
tical    bearing-     on     the     question     at     is- 
sue.   In    seeking    a    remedy  for    the    evil 
of     municipal     indebtedness     which     seri- 
ously threatened  our  cities  and  towns  with 
bankruptcy  during  this  period,  the  constitu- 
tional limitation  of  debt  was  hit  upon,  and 
thus  the  wisdom  of  the  people  put  a  break 
upon    municipal    madness.        In    some    of 
the  more  flagrant  instances,  that  of  Michi- 
gan, for  example,  the  people  even  w7ent  fur- 
ther and  declared  that  the  state  must  not  be 
"a  party  to  or  interested  in  any  work  of  in- 
ternal   improvement,"    so   bitter   had   been 
these  experiments  in  a  theory  of  govern- 
ment foreign  to  the  sound  maxim,  that  the 
country  is  governed  the  best  which  is  gov- 
erned the  least.    This  action  on  the  part  of 
the  people  of  that  state  has  saved  Detroit 
from  one  of  the  wildest  and  probably  one 
of  the  most  disastrous  experiments  in  muni- 
cipal  ownership  yet   recorded.     The  state 
constitutional     limitation     of     debt    which 
stopped  the  debt-creating  mania  during  the 
seventies  and  early  eighties,  will  again  come 
in  to  hold  in  check  these  latter-day  move- 
ments towards  socialism  and  paternalism, 
until  practical  men  in  municipal  affairs  are 


enabled  to  examine  fully,  not  only  the  many 
complex  questions  involved  in  municipal 
ownership  of  all  public  utilities,  but  to  real- 
ize the  stupendous  change  which  such 
an  absorption  of  private  enterprise  would 
bring  about  in  the  fundamental  princi- 
ple of  the  government  of  the  Republic. 
An  effort  is  now  on  foot,  in  my  opin- 
ion fraught  with  great  danger  to  Am- 
erican municipalities,  to  remove  all  con- 
stitutional and  legislative  restrictions  on 
municipal  indebtedness  when  the  muni- 
cipalities wish  to  purchase  these  so-called 
revenue-producing  properties.  Communi- 
ties, like  individuals,  soon  forget  past  ex- 
periences, and  those  who  see  their  wild 
schemes  checked  by  the  sober  judgment  ex- 
pressed by  the  people  during  times  of  state 
and  municipal  bankruptcy,  are  apt  to  urge 
the  removal  of  such  constitutional  barriers. 
Should  this  be  done  and  full  swing  given  to 
municipal  ownership  experiments,  the  Am- 
erican taxpayer  will  simply  invite  financial 
catastrophies  far  more  sweeping  and  de- 
structive than  those  referred  to  in  the 
Michigan  Supreme  Court  decision.  Citi- 
zens who  believe  in  sound  government 
should  vigorously  oppose  all  attempts  to  re- 
move the  constitutional  limitation  on  state 
and  municipal  indebtedness.* 

*As  the  advocates  of  municipal  ownership  are  so  fond 
of  quoting  English  examples  they  are  referred  to  the 
statistics  showing  the  increase  in  local  rates  in  England 
and  Wales  from  1891-2  to  1896-7.  In  1891-2  the  local  rates 
in  England  and  Wales  amounted,  roughly,  to  28  1-2  mil- 
lion pounds;  in  1896-7  they  amounted  to  371-2  millions, 
an  increase  of  about  31  per  cent.  This  was,  of  course, 
accompanied  by  an  increase  in  rateable  value,  and  taking 
this  into  consideration,  the  rate  in  the  pound,  calculated 
on  the  Poor  Rate  valuation,  rose  from  35.  7  i-jd.  to  45. 
6d.,  an  increase  of  about  23  per  cent.  The  increase  in 

5 


Before  those  who  are  responsible  for  the 
administration  of  these  great  trusts  commit 
themselves  to  the  expenditure  of  millions, 
nay  hundreds  of  millions,  of  the  people's 
money,  in  these  daring  experiments,  it  be- 
hooves them  to  acquaint  themselves  with  all 
the  facts.  They  must  study  with  the  utmost 
care  and  impartiality  the  results  of  muni- 
cipal ownership  in  England.  The  official 
reports  in  relation  to  the  operation  of  gas 
works  show  no  special  advantage  in  favor 
of  municipally  owned  plants.  These  fig- 
ures are  accessible  and  in  convenient  form. 
They  must  do  precisely  the  same  in  relation 


rateable  value  had  taken  place  entirely  in  urban  dis- 
tricts. There  had,  indeed,  been  a  fall  in  the  rateable 
value  of  rural  districts.  The  total  rates  for  the  Metropoli- 
tan area  had  risen  within  the  period  under  consideration 
from  53.  to  53.  pd.  in  the  pound;  in  Municipal  county 
boroughs  from  is.  3d.  to  is.  8d. ;  in  county  boroughs 
(urban  sanitary),  from  2s.  6d.  to  25.  nd. ;  and  in  rural 
District  Councils  from  is.  jd.  to  33.  Purely  urban  rates 
were  responsible  for  62  per  cent  of  the  increase.  Those 
outside  London  contributed  the  largest  proportion  of  the 
increase,  but  it  must  be  remembered  that  the  number 
of  urban  districts  had  increased. 

In  an  editorial  on  this  subject  a  London  newspaper 
says : — 

"  'Local  indebtedness  is  mounting  up'  is  a  phrase  that 
is  often  used  in  connection  with  proposals  in  the  domain 
of  municipal  enterprise.  Figures  compiled  by  Mr.  Beck- 
ett, who  read  a  paper  on  the  subject  at  the  Health  Con- 
gress at  Blackpool,  give  us  a  clear  idea  of  what  this 
growing  indebtedness  amounts  to,  both  for  the  individual 
ratepayer  and  in  the  bulk.  In  1875  the  local  debt  per 
head  was  only  £3  173.  2d.,  in  1894  it  had  risen  to  £7  gs. 
2d.  per  head,  or  93  per  cent,  over  1875 ;  and,  of  course, 
it  is  more  now.  This  indebtedness  per  head  has  grown 
much  more  rapidly  than  rateable  value.  In  1875  this  was 
£4  igs.  id.  per  head;  in  .1895  only  £5  73.  2d.,  which  is 
less  than  in  1884.  The  disproportion  between  the  increase 
of  local  indebtedness  and  rateable  value  may  well  cause, 
as  Burdett  says,  an  'uneasy  feeling.'  The  aggregate 
amount  of  local  indebtedness  looks  more  serious.  In 
1874-75  it  was  £92,820,100,  in  1895-96  £243,209,862.  More 
than  one-half  of  the  debts,  said  Mr.  Beckett,  is  due  to 
the  aggressiveness  of  the  local  administrator  as  trader. 
Whether  we  are  paying  too  much  for  our  'municipal 
whistles'  or  not  is  a  question  local  ratepayers  must  de- 
cide for  themselves." 


to  British  tramways.  On  this  side  of  the 
problem  perhaps  I  can  speak  with  some  de- 
gree of  authority,  as  I  have  made  a  careful 
study  of  the  facts  both  at  home  and  abroad.* 
A  brief  reference  will  be  made  hereafter  to 
the  results  of  these  inquiries  in  relation  to 
the  municipalization  of  street  railways  in 
England,  where  we  must  go  for  the  sum 
total  of  experience  up  to  date.  For  the 
moment  we  may  profitably  examine  some 
recent  statements  of  those  who  are  in  the 
front  rank  of  this  movement  toward  the 
municipalization  of  public  utilities.  Here, 
for  example,  is  the  venerable  and  venerated 
Dr.  Lyman  Abbott  declaring  that  "the 
soorfer  our  cities  own  the  lines  of  railroads, 
the  better  both  for  the  convenience  of  the 
people  and  the  purity  of  our  municipal  gov- 
ernments." Similar  assertions  have  been 
made  by  advocates  of  municipal  ownership, 
but  assiduous  search  for  the  statistics,  the 
facts,  if  there  be  any,  upon  which  these  as- 
sertions are  supposed  to  be  based,  have 
failed  to  materialize.  As  I  shall  hereafter 
show,  Dr.  Abbott,  when  asked  to  come  and 
give  reasons  and  facts  for  his  assertions  be- 
fore the  New  York  State  Committee  on 
Street  Railways,  failed  to  appear.  Without 
facts  to  sustain  these  assumptions,  the  posi- 
tion of  such  gentlemen  as  Dr.  Abbott  is 
peculiarly  illogical  and  unbusinesslike.  The 
administrators  of  our  municipalities  have 
been  too  incompetent  and  too  corrupt  to 


*"  Municipal  Ownership  and  Operation  of  Street  Rail- 
ways in  England,"  by  Robert  P.  Porter.  Report  of  the 
special  committee  to  investigate  the  relation  between 
cities  and  towns  and  street  railway  companies,  Boston,  Feb., 
1898 

"Municipal  Ownership  at  Home  and  Abroad,"  by 
Robert  P.  Porter,  100  Broadway,  New  York. 


make  fair  and  just  bargains  with  private  en- 
terprise to  carry  on  works  of  public  utility. 
What  is  the  proposed  remedy?  That  hav- 
ing sold  or  leased  these  rights  to  do  quasi- 
public  business  at  a  public  loss,  the  same  in- 
competent and  corrupt  officials  or  their  suc- 
cessors shall  now  buy  them  back  again — at 
an  excessive  valuation,  as  in  the  case  of  De- 
triot — and  manage  such  trusts  for  the  con- 
venience of  the  public  and  in  the  interests 
of  municipal  purity.  And  this  in  the  face 
of  Professor  Bemis's  declaration  that  a 
large  portion  of  the  force  employed  on  the 
Philadelphia  municipal  gas  plant  was  made 
up  of  ward-heelers,  faithful  only  in  their  al- 
legiance to  a  political  boss.  He  frankly  tells 
us : — 

"The  works  under  public  operation  would  have 
shown  better  results  than  were  obtained  had  it 
not  been  for  the  spoils  system,  general  ineffi- 
ciency and  unprogressiveness." 

The  position  of  these  eloquent  phrase- 
makers  must  strike  practical  administrators 
as  grotesque.  The  practical  man  knows  that 
cities,  like  individuals,  have  made  both  good 
and  bad  bargains  with  private  corporations. 
That  where  one  of  these  bargains  has  been 
corrupt,  a  score,  nay  fifty  or  a  hundred,  have 
been  square  and  honest.  They  know  that 
oftener  than  not  the  cities  in  the  first  in- 
stance have  been  as  glad  to  secure  the  im- 
provement, whether  a  new  water-works,  ad- 
ditional and  improved  gas  plants  or  electri- 
cal street  railways,  as  the  capitalist  has  been 
to  invest  his  money.  They  know  full  well 
that  in  many  cases  capital  has  been  coaxed 
into  the  enterprises.  Indeed,  I  know  per- 
sonally of  the  case  of  a  bankrupt  street  rail- 
s 


way  in  a  western  college  town  in  which  the 
present  operators — the  people  who  fur- 
nished the  equipment — attribute  the  bank- 
ruptcy wholly  to  the  eloquence  of  certain 
college  professors,  who  per- 
suaded the  original  pro- 
moters to  lay  the  line  up  to 
the  University  settlement  in 
advance  of  public  necessity. 
I  have  no  doubt  some  of 
these  very  gentlemen  are 
lecturing  on  the  iniquities 
of  "capitalistic  aggrega- 
tions "  and  kindling  the  fires 
of  "a  new  application  of 
ethical  principles  "  for  effec- 
tual vengeance  for  such  folly. 
These  theoretical  gentlemen, 
who  talk  so  glibly  and 
eloquently  on  municipal 
ownership  in  the  abstract, 
and  conveniently  fail  to 
appear  when  a  New  York 
or  Massachusetts  commission 
are  considering  the  concrete  sides  of  the 
question,  have  little  conception  of  the 
real  obstacles  which  prevent  practical  ad- 
ministrators from  rushing  headlong  into 
these  municipal  experiments.  The  value  of 
the  lines  of  railroads  which  Dr.  Abbott 
thinks  we  should  at  once  own  will  in  1900 
be  in  the  neighborhood  of  sixteen  hundred 
millions  of  dollars  ($1,600,000,000);  add  to 
this  another  one  thousand  million  of  dollars 
($1,000,000,000)  for  municipal  gasworks, 
and  we  have  a  total  of  two  thousand  six 
hundred  million  of  dollars  ($2,600,000,000). 
If  state  constitutional  barriers  could  be 
.thrown  down  to  accomplish  this,  the  muni- 


cipal  indebtedness  of  the  country  would  be 
more  than  quadrupled,  or  increased  from 
eight  hundred  million  dollars  ($800,000,- 
ooo)  to  three  thousand  four  hundred  mil- 
lions of  dollars  ($3,400,000,000),  which  is 
simply  a  preposterous  proposition.  The 
fact  is,  not  one  of  these  able  general- 
izers  in  municipal  ownership  could 
present  a  practically  worked  out  scheme 
for  the  acquisition  and  management  of 
a  water-works,  a  gas  plant  or  an  electric 
street  railway.  I  mean  a  proposition 
that  would  be  accepted  in  the  financial 
world  and  stand  the  test  of  the  courts.  The 
Rev.  Dr.  Washington  Gladden,  of  Colum- 
bus, Ohio,  forcibly  expresses  a  sentiment, 
which  a  fair-minded  writer  in  that  ably-ed- 
ited newspaper,  the  Brooklyn  Eagle,  says 
"has  run  like  wildfire  through  the  West  and 
has  reached  the  East."  Dr.  Gladden 
says : — 

''There  is  one  class  of  capitalistic  aggregations, 
based  on  monopoly,  against  which  popular  in- 
dignation is  likely  to  be  kindled  even  sooner  than 
against  the  so-called  trusts.  I  refer  to  those 
which  are  founded  on  municipal  franchises.  Most 
of  the  companies  owning  these  franchises  have  is- 
sued capital  far  in  excess  of  their  actual  invest- 
ment, have  disposed  of  the  stock  thus  issued  and 
are  charging  enough  for  the  services  rendered  the 
public  to  pay  the  dividends  on  all  this  watered 
stock.  If  they  were  content  with  a  fair  return 
on  what  the  plant  has  actually  cost  them,  the 
price  of  the  service  could  be  greatly  reduced.  A 
fair  return  on  their  actual  investment  nobody 
grudges  them,  but  the  privilege  of  taxing  the 
community  to  pay  dividends  on  two  or  three  times 
as  much  money  as  they  have  invested  is  going  to 
be  questioned  one  of  these  days.  When  the  reck- 
or.ing  day  comes  to  our  monopolies  some  sharp 
inquisition  may  be  made  into  the  fundamental 
equities  of  many  of  these  institutions.  Vested 


rights  will  be  respected,  I  have  no  doubt;  but 
vested  wrongs  may  be  called  to  account.  It  is 
probable  that  some  new  legal  maxims  will  be 
framed  and  enforced  and  that  our  jurisprudence 
will  be  enlarged  and  invigorated  by  a  new  ap- 
plication of  ethical  principles.  Whether  corpora- 
tions in  any  sense  private  will  long  be  permitted 
to  manage  public  utilities  may  be  doubted;  but 
if  they  do  they  will  certainly  be  required  to  gov- 
ern their  conduct  by  a  strict  regard  for  the  pub- 
lic welfare." 

Commenting  on  this,  the  Brooklyn  Eagle 
writer  says : — 

"In  this  statement  made  by  Dr.  Gladden  is  the 
principal  charge  in  the  indictment  which  the  ad- 
vocates of  Municipal  Ownership  have  brought 
against  corporations  owning  surface  railroads, 
gas,  electric  light  and  telephone  plants.  You 
will  find  the  same  charge  made  by  Professor  Be- 
mis  in  his  book  on  "Municipal  Monopolies";  the 
same  charge  is  being  made  from  pulpits  and  the 
chairs  of  college  professors  all  over  the  country. 
With  the  truth  or  falsity  of  this  charge  the  writer 
has  no  concern  in  the  writing  of  these  letters;  for 
he  is  dealing  with  facts,  as  they  have  been  found. 
Yet  one  may  be  permitted  to  say,  without  being 
open  to  the  charge  of  bias,  that  this  charge  has, 
so  far,  not  been  answered." 

This  sweeping  and  general  and  unsup- 
ported charge  has,  in  my  opinion,  not  been 
answered  specifically,  in  the  first  place 
because  there  is  no  specific  charge  to 
answer.  Professor  Bemis  himself  seems 
to  be  in  despair  in  relation,  to  gas 
statistics  for  comparative  purposes,  and 
yet  for  years  he  has  made  a  specialty 
of  this  branch  of  the  subject.  He 
has  given  us  a  bewildering  assortment  of 
statistics,  and  led  us  into  the  labyrinthine 
mains  of  gas  statistics  until  we  supposed 
the  subject  exhausted  and  municipal  owner- 

TI 


ship  in  gasworks  a  mathematically  demon- 
strated success.    And  now  he  says : — 

"It  is  indeed  difficult  to  gather  statistics  of  any 
value  upon  electric  and  gas  lighting.  The  bias 
of  the  investigator,  the  secretiveness  of  the  pri- 
vate companies,  the  poor  bookkeeping  of  many  of 
the  public  companies  and  the  fact  that  the  con- 
duct of  a  public  plant,  especially  one  united  with 
a  water  plant,  does  not  require  the  keeping  of  ac- 
counts in  the  way  most  conclusive  to  compari- 
sons with  other  companies,  account  for  the  well- 
grounded,  distrust  of  most  lighting  statistics." 

Here  we  have  the  unscrupulous  secret- 
iveness of  the  private  companies,  that  was  to 
be  expected  from  Professor  Bemis ;  but 
what  are  we  to  think  of  the  "poor  book- 
keeping of  the  public  companies"?  I  have 
recently  examined  some  excellent  official 
statistical  exhibits  relating  to  the  principal 
gasworks  of  England,  and  find  them  cap- 
able of  comprehension  by  the  ordinary 
mind.  The  cost  of  management  and  of 
product  to  the  consumer  is  clearly  set  forth 
—municipal  gasworks  on  the  one  side  and 
private  gasworks  on  the  other — and  the  re- 
sult by  no  means  favors  municipal  owner- 
ship. Yet  the  so-called  "spoils  system" 
does  not  prevail  in  England.  The  Gas  and 
Electric  Light  Commission  of  Massachu- 
setts have  recently  published  a  very  com- 
prehensive volume  of  gas  and  electric  light 
statistics,*  in  which  similar  comparisons  are 
made  between  municipally  owned  light 
plants  and  privately  operated  plants,  to  the 
detriment  of  the  former.  The  public  seem 


*  Annual  Report  of  the  Board  of  Gas  and  Electric  Light 
Commissioners  of  the  Commonwealth  of  Massachusetts, 
January,  1899. 

12 


to  pay  higher  for  the  municipal  than  for  the 
private  company  gas.  • 

It  is  to  be  hoped  that  Professor  Bemis's 
announcement,  that  there  is  a  "well-ground- 
ed distrust  of  most  lighting- 
statistics,"  is  not  due  to  the 
fact  that  the  figures  published 
do  not  point  his  way.  Certain- 
ly the  English  official  returns 
and  those  trom  the  last  Massa- 
chusetts report  do  not  support 
his  theories,  while  many  of  his 
other  comparisons  have  been 
seriously  questioned  by  those 
who  speak  with  expert  author- 
ity. Take,  for  example,  the 
Philadelphia  case,  which  has 
been  quite  roughly  handled  by 
Professor  Bemis,  and  yet  it  has 
turned  out  an  admirable  ar- 
rangement for  the  municipal- 
ity. An  arrangement,  by  the 
way,  which  some  of  the  cities 
owning  their  gasworks  would 
be  wise  to  follow. 

In  pursuance  of  its  contract,  the  United 
Gas  Improvement  Company  has  spent  in 
betterments  on  the  Philadelphia  gas  plant, 
from  December  i,  1897,  to  June  I,  1899, 
$4,049,541.72.  It  turned  into  the  city  treas- 
ury for  old  gas  bills  collected,  being  bills 
for  gas  supplied  by  the  city  prior  to  the  date 
of  the  lease,  $707,340.09.  It  has  paid  into 
the  city  treasury  the  amount  of  the  inven- 
tory of  materials  on  hand  at  the  date  of  the 
lease — being  coal,  lime,  etc.,  $187,678.73. 
It  has  paid  into  the  city  treasury  10  per 
cent  on  all  collections  from  the  date  of  the 


lease  to  July  i,  1899,  $467,628.41.  It  must 
be  remembered  that  the  company  is  not 
paying  for  a  franchise,  but  is  paying  rent  for 
the  very  valuable  gas-making  property  of 
the  city,  upon  which  it  is  also  bound  by  the 
terms  of  the  lease  to  expend  these  large 
sums  of  money  in  betterments.  Cities  that 
are  tempted  to  follow  the  lead  of  Governor 
Pingree  and  Mayor  Jones  into  municipal 
ownership  of  "public  utilities"  will  do  well 
to  wait  until  there  are  more  abundant  ma- 
terials for  a  comparison  of  the  results  in  a 
great  city  of  municipal  and  of  private  gas 
production  and  distribution.  Fortunately 
for  Philadelphia,  the  company  making  this 
contract  with  the  municipality  consisted  of 
men  of  the  highest  integrity  and  at  the  same 
time  represented  the  highest  grade  of  ex- 
perience in  the  manufacture  of  gas.  They 
can  furnish  a  better  commodity  for  less 
money  than  any  municipal  plant,  and  hence, 
while  they  make  a  reasonable  and  fair  prof- 
it themselves,  they  serve  the  community  far 
better  than  it  has  ever  been  served  before. 
If  Philadelphia  would  take  precisely  the 
same  course  with  its  water-works  the  public 
would  be  better  served  and  millions  saved 
to  the  taxpayers. 

As  a  rule,  these  college  and  pulpit 
charges  are  vague  and  only  supported  here 
and  there  by  stray  facts,  largely  culled  from 
inflammatory  newspapers.  The  charges 
made  by  Dr.  Gladden  and  by  Professor 
P>emis  may  be,  and  probably  are,  true  in 
some  particular  instances  where  private 
capital  and  peculiar  conditions  have  enabled 
private  corporations  to  drive  good  bargains 
with  the  administrators  of  public  corpora- 

14 


tions.  In  a  majority  of  such  cases,  how- 
ever, it  will  be  found  that  the  -'vested 
wrong"  has  become  so  by  reason  of  unex- 
pected growth  or  prosperity  of  the  com- 
munity, and  not  because  the  contract  when 
made  was  at  that  time  against  public  wel- 
fare. The  only  remedy  in  such  cases  is 
more  care  in  the  future  on  the  part  of  muni- 
cipal administrators.  Reasonable  leases 
should  be  made,  instead  of  franchises  in  per- 
petuity. Our  present  municipal  adminis- 
trators are  more  awake  to  this.  In  New 
York  the  new  state  constitution  limits  such 
franchises  to  twenty-five  years.  This  is  a 
practical  way  to  prevent  the  perpetual  fran- 
chises. And  yet  if  these  gentlemen  will 
take  the  trouble  to  study  the  history  of 
some  of  the  worst  of  these  "vested  wrongs," 
they  will  find  that  many  of  the  most  profit- 
able of  them  went  begging  for  years.  That 
the  communities  looked  upon  the  promot- 
ers as  public  utility  cranks,  instead  of  pub- 
lic utility  thieves.  That  the  original  enthu- 
siastic owners  were  buffeted  from  pillar  to 
post  in  their  endeavor  to  find  capitalists  wil- 
ling to  risk  their  money  to  operate  them, 
and  that  the  present  "deplorable  condition 
of  affairs"  is  as  much  due  to  the  persistent 
and  stubborn  growth  and  prosperity  of 
these  American  cities  as  to  the  inherent  dis- 
honesty and  wickedness  of  the  "capitalistic 
aggregations"  which  incite  the  righteous 
indignation  and  wrath  of  these  public  spir- 
ited gentlemen. 

So  far  as  my  own  personal  inquiries  in 
relation  to  municipalization  of  street  rail- 
ways indicate  anything  they  clearly  point 
out  that  the  glowing  accounts  we  have  had 

15 


of  such  experiments  by  returned  American 
travelers  from  the  other  side  are  valueless 
when  submitted  to  practical  American  tests. 
Not  only  are  the  statements  of  success  and 
profits  greatly  exaggerated,  but  municipal 
ownership  has  not  made  anything  like  the 
headway  in  the  United  Kingdom  which 
many  would  have  us  believe.  Indeed,  there 
is  much  misapprehension  in  the  United 
States  on  this  subject.  Some  accounts  would 
seem  to  indicate  that  England  has  munici- 
palized such  undertakings  as  water,  gas, 
electric  lighting,  and  street  railways  to  a 
much  greater  extent  than'  the  facts  warrant. 
In  reality,  if  an  absolutely  accurate  compari- 
son could  be  made  between  the  United 
Kingdom  and  the  United  States,  it  is  doubt- 
ful which  of  the  two  countries  would  lead  in 
this  respect.  I  refer,  of  course,  to  public 
service,  with  profit-earning  possibilities. 
For  example,  should  we  consider  the  four 
important  branches  of  service — the  supply 
of  water,  gas,  electric  light,  and  street  rail- 
ways— together,  it  would  be  safe  to  say  that 
honors  in  favor  of  the  municipalization  of 
these  undertakings  would  be  about  equally 
divided  in  the  two  countries. 

To  those  without  practical  experience  in 
handling  such  vast  undertakings,  and  who 
therefore  cannot  possibly  realize  the  ob- 
stacles in  the  way  of  turning  over  such  stu- 
pendous enterprises  as  these,  requiring,  as 
they  do,  so  much  expert  knowledge,  to  of- 
ficials in  no  way  specially  trained,  munici- 
palization is  no  doubt  a  fascinating  idea. 
Hence  we  find  many  writers  at  home  taking 
it  up  with  avidity,  and  as  a  result  the  litera- 
ture on  the  subject  during  the  last  decade 
16 


has  increased  far  more  rapidly  than  the  ex- 
periments themselves.  A  few  instances  of 
municipal  ownership  have  been  made  to  do 
duty  for  so  many  books,  essays,  lectures, 
and  articles  that  the  practical  man  of  affairs 
is  beginning  to  inquire  for  additional  partic- 
ulars. Exaggerated  and  enthusiastically 
written  accounts  of  the  municipal  millen- 
nium of  Glasgow  and  Birmingham  no  long- 
er arrest  his  attention ;  while  the  sudden 
change  in  public  sentiment  in  1894  in  favor 
of  a  halt  in  the  startling  experiments  inau- 
gurated by  the  London  County  Council  has 
greatly  increased  the  doubts  of  those  who 
are  not  sure  that,  even  if  the  success  in  this 
direction  had  been  as  great  as  intimated  in 
England,  similar  experiments  might  not  be 
fraught  with  great  danger  this  side  the  At- 
lantic. 

The  results  of  my  own  inquiries  into  the 
working  of  municipalized  street  railroads  in 
England  are  supported  by  almost  identical- 
ly the  same  investigation  and  analysis  of  the 
same  facts  by  Benjamin  Taylor,  F.  R.  G.  S., 
who  thus  sums  up  his  facts  in  the  August 
(1899)  Cassier's  Magazine: — 

"This  review  then,  of  municipal  enterprise  in 
the  working  of  tramways  in  the  United  Kingdom, 
leads  to  the  conclusion  that  in  no  single  instance 
has  it  been  perfectly  successful.  Glasgow  fur- 
nishes the  nearest  approach  to  success,  but  in 
Glasgow,  with  a  small  track  for  an  enormous  de- 
pendent population,  it  would  take  very  bad  man- 
agement indeed  to  produce  financial  failure.* 

*  Mr.  Taylor  is  correct  in  this  statement,  and  he  might 
have  added  that  an  American  company  at  the  time  Glasgow 
took  over  the  tramways  stood  ready  to  lease  the  enterprise 
and  pay  a  cash  sum  annually  into  the  Glasgow  city  treasury 
for  a  permit  of  twenty -one  years  far  in  excess  of  the  profits  o'f 
any  year.  Not  only  this,  but  the  fares  were  not  to  be 
increased. 


And  in  Glasgow  the  system  is  a  very  long  way 
short  of  perfection,  while  the  retention  of  horse 
haulage  renders  the  future  exceedingly  insecure. 
In  no  single  instance  can  the  municipal  working 
of  tramways  be  demonstrated  to  be  a  commercial 
success;  and  in  no  single  instance  has  municipal 
management  fulfilled  the  socialistic  ideal,  either 
in  respect  of  its  servants  or  its  passengers." 

It  is  a  very  significant  fact  that  Mr.  Tay- 
lor, writing  from  the  British  standpoint,  and 
conducting  an  investigation  entirely  inde- 
pendent, should,  with  the  same  facts  and 
figures  before  him — the  official  reports  of 
these  several  enterprises — arrive  at  almost 
identically  the  same  conclusions  as  those 
which  you  will  find  in  the  paper  which  I  had 
the  honor  to  submit  in  response  to  a  re- 
quest from  the  chairman  of  the  Massachu- 
setts State  Committee  in  December,  1897, 
and  which  will  be  found  in  extenso  in  the 
report  of  that  committee.  Again  Mr.  Tay- 
lor says  :— 

"The  writer  does  not  hesitate  to  say  that  any 
well-managed  company,  in  possession  of  the  ad- 
vantages which  any  of  these  corporations,  whose 
work  has  been  reviewed,  possess,  would  have  long 
ere  this  produced  better  results,  both  for  itself 
and  for  the  public.  Nothing  is  said  of  the  serious 
dangers  and  onerous  charges  that  may  await  the 
ratepayer  as  the  result  of  what  Lord  Wemyss  calls 
'the  mad  move  of  municipalities  toward  the  muni- 
cipalization  of  everything — gas,  water,  tramways, 
in  the  present  and  all  other  things  in  the  muni- 
cipal future.'  " 

The  fact  that  these  socialistic  experi- 
ments rarely  meet  the  anticipation  of  the 
labor  side  of  the  problem  is  receiving  em- 
phasis at  this  moment  in  London.  Last 
month,  when  in  London,  the  newspapers 
were  giving  in  detail  the  woes  of  the  County 
18 


Council  tramway  employees,  who  were  pite- 
ously  calling  upon  their  brother  omnibus 
drivers — employed  by  soulless  private  cor- 
porations, but  as  well  paid  as  any  labor  in 
Great  Britain — to  come    to    their    rescue. 
When  in  London  the  general  secretary  of 
the  union  gave  me  a  brief  list  of  the  griev- 
ances of  the  men  thus  employed  by  the  Lon- 
don County  Coun- 
cil— the  body  that 
started      out      six 
years  ago  to  relieve 
all  the  burdens  of 
London  labor  and 
London     poor. 
From    this   it   ap- 
pears that  the  men 
are  being  asked  to 
sign  an  agreement 
to  work  under  the 
Council's  rules  and 
regulations,  many 
of  which  are  said 
to  be  decidedly  un- 
fair  towards    the 
workers.      In    one 
case,   by  Rule  33, 
the    men   are   re- 
quired   to    be    al- 
ways within    call. 
During  their  hours 
of    rest    they    are 

liable  to  be  called  upon  at  any 
moment  to  begin  work,  so  that  they  dare 
not  leave  home,  and  cannot  call  a  single 
hour  of  the  week  their  own.  Again,  by 
Rule  31,  any  disparaging  remarks  made  by 
employees  concerning  the  conduct  -  and 
management  of  the  tramway  system  are  to 
be  treated  as  a  breach  of  the  rules,  and  Rule 

iq 


35  provides  that  any  such  breach  of  rules 
may  be  punished  by  instant  dismissal.  Fur- 
ther, although  a  workman  is  liable  to  in- 
stant dismissal,  he  may  not  leave  of  his  own 
accord  without  giving  a  full  week's  notice. 
The  workmen  also  object  to  the  exception- 
ally long  hours  which  they  are  called  upon 
to  work,  one  instance  being  an  unbroken 
period  of  twelve  hours  and  twenty  minutes 
on  Sundays.  The  extra  men,  moreover,  are 
obliged  to  loiter  about  the  yards  for  hours 
without  getting  a  job,  and  their  work  is  paid 
for  at  the  rate  of  QS.  a  week  less  than  that 
of  the  regular  workers.  The  men  complain 
that  they  have  been  left  in  the  lurch  by  the 
Council.  The  London  County  Council  has 
always  prided  itself  with  being  a  model  em- 
ployer of  labor ;  yet  these  men  openly 
claimed  to  me  a  few  weeks  ago  that  the 
union  could  prove  that  the  London  County 
Council  was  the  worst.  The  tramway  en- 
terprise has  been  conducted  contrary  to  all 
the  principles  of  trade  unionism.  Surely 
the  second  condition  of  these  men  is  worse 
than  the  first.  A  London  newspaper  in  an 
editorial  takes  this  view  of  the  subject : — 

"What  seems  most  likely  is  that,  when  the 
Council  came  to  examine  the  subject  of  tramway 
administration  practically,  they  found  that  the 
prospects  of  extensive  improvement  in  the  con- 
ditions of  labor  which  the  advocates  of  'Collect- 
ivist'  control  had  held  out  could  not  be  realized 
without  throwing  upon  the  rates  additional  bur- 
dens, for  which  even  a  Progressive  majority 
lacked  the  courage,  when  it  came  to  the  pinch,  to 
become  responsible.  .  .  .  What  it  means  is  that 
the  pressure  now  applied  to  the  men  will  be  trans- 
ferred to  the  masters;  that  under  pain  of  losing 
votes  the  Progressives  will  be  urged  to  concede 
what  their  servants  insist  upon.  It  would  be  an 


interesting  struggle  for  outsiders  to  watch,  if 
it  did  not  seem  so  very  probable  that  the  settle- 
ment will  be  arranged  at  their  own  expense." 

This  is  a  phase  of  the  municipal  owner- 
ship question  which  American  taxpayers 
will  do  well  to  study.  When  the  wages  of 
men  become  political  questions,  the  men 
will  likely  get  the  increased  wage,  the  politi- 
cal party  the  votes,  and  the  taxpayer  the  bill 
of  expenses.  If  it  should  appear  that,  with 
officials  less  subject  to  political  influences 
than  the  officials  of  American  cities,  Eng- 
land has  made  no  greater  headway  on  the 
whole  in  the  municipalization  of  such  un- 
dertakings as  water,  gas,  electric  lighting, 
and  street  railways,  then  it  may  be  worth 
while  for  us  to  study  more  carefully  that 
middle  and  safer  ground  which  may  be 
found  in  good  working  condition  on  the 
Continent,  and  has  been  able  to  ob- 
tain the  best  expert  service  of  private  enter- 
prises with  such  municipal  control  as  ab- 
solutely protects  the  public  interest ;  in 
other  words,  the  highest  efficiency  of  serv- 
ice, adequate  compensation  for  rights  and 
franchises  conferred,  reasonable  public  con- 
trol, without  making  the  municipality  an 
enormous  labor-employing  bureau,  with  its 
innumerable  complications  and  stupendous 
dangers. 

It  is  doubtful,  when  all  the  important  fac- 
tors of  the  problem  are  taken  into  consider- 
ation, if  the  advocates  of  municipal  opera- 
tion can  point  to  a  single  instance  in  which 
such  service  is  performed  better  and  cheap- 
er and  on  more  intelligent  principles  abroad 
than  in  the  United  States.  If  American  labor 
would  be  contented  with  the  foreign  scale  of 


wages,  we  might  be  able  to  give  our  theo- 
retical friends  even  lower  car  fares  than  they 
now  enjoy.  This  statement  is  made,  how- 
ever, as  the  lawyers  say,  without  prejudice 
to  the  claim  which  I  believe  can  be  sus- 
tained, namely,  that  in  spite  of  the  great  dif- 
ference in  wages,  such  service  is  performed 
in  the  United  States  today  as  well  and 
cheaper  than  similar  service  in  any  Europ- 
ean city. 

Politics,  red  tape,  ignorance,  timidity,  op- 
posing interests,  and  the  deadly  fear  that 
private  enterprise  should  make  a  dollar 
profit,  have  all  helped  in  England,  and  to  a 
lesser  extent  on  the  Continent,  to  retard  the 
extension  of  street  railways  to  meet  the 
pressing  demands  of  population.  In  Am- 
erica, however,  private  capital  has  had  full 
swing,  and  with  a  courage  almost  akin  to 
recklessness  has  not  hesitated  to  discard, 
regardless  of  cost,  one  system  of  propulsion 
as  fast  as  a  better  offered.  Whatever  the 
sins  of  the  American  street-car  man  may  be 
— and,  like  all  the  rest  of  humanity,  he  is 
far  from  perfection — he  is  up  to  date.  He 


has  planned  his  railway  system  on  broad 
lines,  including  the  districts  that  pay  and 
the  districts  that  must  be  run  with  a  loss. 
He  has  gone  ahead  and  taken  his  chances 


22 


with  the  rest  of  the  community,  pinning  his 
faith  on  the  growth  of  the  city  and  the  in- 
crease of  the  suburban  districts.  He  has  not 
been  contented  to  pick  up  the  pennies  with- 
in the  city  walls,  but  has  boldly  branched 
out  in  all  directions,  building  up  suburban 
districts  where  none  existed,  and  increasing 
real  estate  values  along  the  route.  The 
American  street  railway  man  may  have 
driven  good  bargains  for  himself,  and  di- 
rectly he  may  not  pay  as  much  into  the  cof- 
fers of  municipalities  as  toll  for  the  use  of 
the  streets,  as  his  co-laborer  beyond  the  At- 
lantic. Weighed,  however,  in  the  balance 
of  good  business  and  common  sense,  he  can 
point  to  achievements  which  far  outweigh 
the  results  attained  in  England,  where 
municipal  pettifogging  has  effectually 
soaked  the  enterprise  out  of  street  railways, 
and  on  the  Continent,  where  private  enter- 
prise has  only  been  allowed  to  go  ahead  af- 
ter being  enveloped  in  a  sack  of  govern- 
mental restrictions.  Instead  of  petty  rail- 
way budgets,  showing  so  much  profit  to 
the  municipality,  the  American  city  can 
point  to  largely-increased  real  estate  values, 
and  millions  added  to  the  tax  rolls,  in  a 
large  measure  the  result  of  distributing  the 
population  of  our  cities  beyond  the  bound- 
aries far  into  the  country  districts.  Look  at 
the  area  of  American  cities  compared  with 
the  larger  cities  of  Europe.  Without  cheap 
and  rapid  transit,  all  the  recent  extensions 
of  the  boundaries  of  our  cities  would  have 
been  impossible. 

The  American  street  railway  man  may 
therefore  point  with  righteous  pride  to  his 
track  mileage,  exceeding  by  6,000  miles  that 

23 


of  Europe,  to  the  4,000,000,000  passengers 
which  he  annually  conveys  to  and  from 
their  homes,  and  to  the  fact  that  he  has  not 
waited  for  the  population  to  come  to  him, 
but  has  gone  out,  true  American  fashion, 
in  advance  of  population,  and  built  up  dis- 
tricts at  great  expense,  which  he  now  works 
with  a  profit,  not  alone  to  himself,  but  to  the 
city  wrhose  revenue  from  taxes  is  thereby 
increased.  On  the  question  of  charges,  the 
American  street  railway  compares  favorably 
with  similar  systems  abroad.  In  the  first 
place,  we  have  solved  the  question  of  a  uni- 
form fare,  while  nearly  every  municipality 
which  I  have  visited  in  Europe  is  strug- 
gling, apparently  hopelessly,  with  this  ques- 
tion. Why?  Because  the  municipality  has 
not  the  courage  of  private  enterprise.  A 
uniform  fare,  it  is  contended,  gives  the 
longer  haul  an  advantage  over  the  shorter ; 
so,  to  avoid  this,  in  Glasgow  the  acme  of  ab- 
surditv  has  been  reached  bv  a  one-cent  fare 


for  a  trifle  over  half  a  mile.  It  is  far  better  for 
a  man  to  walk  half  a  mile  than  to  ride  any- 
how, and  quicker,  it  seems  to  me,  after  try- 

24 


ing  halfpenny  fares  on  the  newly  inaugur- 
ated municipal  horse  tramways  of  the  Scot- 
tish city,  which  social  reformers  claim  has 
solved  the  true  art  of  municipal  government 
and  municipally  operated  transit. 

With  their  eyes  bent  on  the  puttering 
short  haul,  the  street  railways  of  the  United 
Kingdom  and,  to  a  lesser  extent,  of  conti- 
nental Europe,  have  failed  to  realize  that  it 
is  the  cheap  long  haul  that  relieves  the  con- 
gested spots  of  our  great  cities ;  that  creates 
cheap  homes;  that  carries  the  people  into 
the  suburban  districts;  and,  lastly,  that 
builds  up  new  taxable  areas,  which  ulti- 
mately give  back  to  the  city  a  hundred  fold 
more  than  it  would  ever  make  trying  to  do 
for  itself  that  which  can  be  far  better  done 
by  private  ingenuity,  economy,  and  enter- 
prise. So  Liverpool  and  London  and  Paris 
are  all  at  this  moment  in  their  new  street 
railway  enterprises  agitating  the  uniform 
fare  question,  as  though  it  was  something 
new  and  strange  and  wonderful.  To  the 
canny  Scotch  mind,  however,  in  Glasgow, 
it  seems  a  dreadful  thing  that  one  passenger 
should  get  a  fifteen-mile  ride  for  the  same 
price  paid  by  another  passenger  for  the 
privilege  of  going  one  mile.  I  say  fifteen 
miles,  but  on  this  point  I  may  be  corrected, 
because  it  was  only  the  other  day  I  was  told 
that  in  New  York  City  you  can  now  ride  for 
five  cents  along  twenty-five  miles  of  road 
and  through  territory  which  ten  years  ago 
would  have  cost  you  twenty-five  cents  and 
three  hours'  time.  The  efficacy  of  the  Am- 
erican nickel,  it  is  true,  has  helped  us  out; 
though  with  the  elaborate  systems  of  trans- 
fers inaugurated  in  the  larger  cities,  the 


actual  American  fares  can  not  be  measured 
by  five  cents.  In  New  York  City  the  enter- 
prising Metropolitan  Street  Railway  Com- 
pany have,  during  the  last  three  years, 
increased  their  transfer  sys- 
tem from  thirty-two  mil- 
lions in  1896  to  sixty-four 
millions  in  1897,  to  ninety 
millions  in  1898,  and  to  one 
hundred  and  thirty- four 
millions  in  1899,  thereby 
reducing  the  average  fare 
to  about  three  and  a  quarter 
cents,  which,  as  I  have 
shown,  is  less  than  the  av- 
erage fares  on  the  Paris 
tramways ,  less  by  more 
than  a  half  a  cent  than  the 
average  fares  on  the  omni- 
bus of  Paris.  In  London, 
where  the  "Penny  Bus" 
is  so  much  in  evidence  that 
one  would  imagine  they  could  get  all 
over  London  for  two  cents,  the  mean 
rate  per  mile  is  nearly  two  cents — 
that  is  .92  of  an  English  penny.  The 
tramways  of  London  charge  over  one 
and  a  half  cents  per  mile,  and  the  fares 
range,  as  do  those  of  the  omnibus,  from  two 
cents  to  twelve,  according  to  distance. 

But  these  are  mere  details.  We  can- 
not reach  a  safe  plane  of  comparison  be- 
tween European  and  American  municipali- 
ties without  a  proper  understanding  of  the 
two  systems  of  local  government,  and  es- 
pecially of  the  relations  of  central  and  local 
government  in  the  two  countries.  The  first 
essential,  in  my  opinion,  is  to  determine  the 
26 


position  of  the  city  correctly  and  definitely. 
If  after  this  we  shall  find  that  in  England — 
and  in  a  greater  degree  on  the  Continent 
— the  municipality  is  both  an  agent  of  the 
state  and  an  organization  for  the  satisfac- 
tion of  local  needs,  may  not  some  of  these 
reformers  have  to  begin  their  work  all  over 
again  and  become  advocates  of  the  great 
central  power,  such  as  that  possessed  in 
Germany?  In  that  country  state  owner- 
ship of  railways  has,  perhaps,  met  with  a 
measure  of  success  as  a  producer  of  gov- 
ernmental revenue,  though  not  as  a  medium 
of  quick,  cheap,  and  efficient  transportation, 
as  in  England  and  the  United  States,  where 
the  railways  are  in  private  hands.  Yet 
Germany  draws  the  line  on  street  railways, 
and  the  future  policy  of  that  happy  hunting 
ground  of  the  advocates  of  state  ownership 
and  operation  of  profit-earning  undertak- 
ings will  be  in  the  direction  of  private  oper- 
ation, and  moderate  municipal  control.  In 
support  of  this,  and  also  in  support  of  my 
claim  that  the  English  experiments  in  muni- 
cipalization  of  street  railways  are  inade- 
quate, let  me  call  attention  to  the  following 
paragraph  in  the  report  of  the  Massachu- 
setts Special  Committee  appointed  to  inves- 
tigate the  relations  between  cities  and  towns 
and  street  railway  companies  : — 

"As  yet  no  attempt  at  the  municipalization  of 
street  railways  has  been  made  in  any  country  on 
a  sufficiently  large  scale  and  for  a  long  enough 
time  to  be  of  real  significance.  Glasgow  and 
Leeds,  for  instance,  are  the  two  European  in- 
stances more  frequently  referred  to.  From  the 
statements  often  met  with  in  the  press,  and  the 
assertions  heard  in  discussion,  it  might  well  be 
assumed  that  the  experiments  made  in  these  cit- 

27 


ies  amounted  to  an  indisputable  and  established 
success;  whereas,  in  point  of  fact,  such  is  in  no 
degree  the  case.  (Those  seeking  further  informa- 
tion on  this  subject  are  referred  to  a  very  inter- 
esting, as  well  as  instructive,  paper  submitted  to 
the  committee  by  Robert  P.  Porter,  superintend- 
ent of  the  United  States  Census  of  1890,  printed 
in  the  appendix  to  this  report. )  So  far  from  being 
a  demonstrated  success,  it  may,  on  the  contrary, 
be  confidently  asserted  that  nowhere,  as  yet,  has 
the  experiment  of  municipalization  of  street  rail- 
ways been  worked  out  to  any  logical  and  ultimate 
results  whatever,  nor  can  it  be  so  worked  out  for 
at  least  a  score  of  years  to  come.  Even  then, 
political  habits,  social  traditions,  and  material 
and  economical  conditions  vary  so  greatly,  and 
enter  to  so  large  an  extent  into  the  problem,  that 
it  will  not  be  safe  to  infer  that  what  may  have 
proved  safe  and  practicable  in  one  community  is 
.either  practicable  or  safe  in  another.  At  the  pres- 
ent time,  the  municipalization  of  the  street  rail- 
ways is  not  accepted  as  by  any  means  indisput- 
ably desirable  in  Great  Britain,  while  in  Ger- 
many it  is  regarded  unfavorably.  This  last  fact  is 
the  more  noteworthy,  as  Germany  has  been  the 
field  in  which  state  ownership  and  management 
of  steam  railroads  has  been  developed  to  the  full- 
est extent,  and  with  results  pronounced  to  be  un- 
questionable, as  well  as  most  satisfactory.  The 
grounds  for  this  apparently  illogical  action  and 
contradictory  policy  were,  during  the  last  sum- 
mer, briefly  set  forth  to  a  member  of  the  com- 
mittee by  the  highest  German  authority.  They 
were  purely  practical.  The  state  official  referred 
to  simply  said  that  Germany  had  carried  official- 
ism as  far  as,  in  his  judgment,  it  was  prudent  to 
go.  The  government  employees  tended  always  to 
increase;  and  there,  as  here,  if  was  found  that  em- 
ployment by  the  government  signified  much 
which  did  not  at  once  appear.  The  line  had  to  be 
drawn  somewhere;  and  it  was  not  considered  ex- 
pedient to  add  to  the  number  already  existing 
the  numerous  officials  and  employees  of  all  the 
street  railway  systems  in  the  empire." 

The  member  of  the  committee  referred  to 
in  the  report  was  the  Hon.  Charles  Francis 

28 


Adams,  of  Boston,  one  of  the  clearest-  head- 
ed and  fairest-minded  men  we  have  in  pub- 
lic life,  and  an  expert  in  railway  matters.  I 
had  several  conferences  last  autumn  with 
Mr.  Adams  on  this  subject,  and  found  my 
own  conclusions  identical  with  his,  after 
having  independently  gone  over  much  the 
same  ground.  Since  then  I  have  spent  two 
months  in  Berlin  and  conferred  with  the 
same  officials  and  can  personally  vouch  for 
these  opinions  being  generally  held  in  Ger- 
many. The  fact  is,  we  are  not  yet  prepared 
for  the  German  system  of  centralization  in 
the  United  States,  nor  do  I  see  in  the  Eng- 
lish experiment  in  municipalization  any- 
thing particularly  attractive,  either  from  the 
standpoint  of  service  rendered,  or  pecuniary 
results  to  the  municipalities. 

In  its  conclusion  the  Massachusetts  Com- 
mittee says : — 

"So  far  as  Massachusetts  is  concerned,  the 
committee  apprehends  that  great  difficulties  of  a 
practical  as  well  as  theoretical  character  would 
present  themselves,  should  a  serious  attempt  be 
made  at  the  complete  municipalization  of  street 
railways." 

And  this  should  be  the  general  conclu- 
sion of  all  who  impartially  study  the  ques- 
tion. The  old  aspect  of  municipal  adminis- 
tration dealt  with  the  paving  and  lighting 
of  streets ;  the  supply  of  water ;  the  con- 
struction of  sewers ;  in  maintaining  order 
and  occasionally  in  the  establishment  of 
parks.  The  new  phase  of  municipal  admin- 
istration, in  its  most  ambitious  form,  aims 
to  deal  with  every  question  that  directly  or 
indirectly  affects  the  life  of  the  people.  Car- 
ried to  the  extent  which  it  has  been  in  some 

29 


British  cities,  it  is  in  fact  municipal  social- 
ism. The  new  school  of  municipal  adminis- 
tration in  England  enters  into  the  life  of  the 
people.  It  not  only  takes  upon  itself  the  un- 
profitable side  of  the  local  budgets,  but  ar- 
gues very  plausibly  that  a  well-governed 
municipality  can  afford  to  give  no  privileges 
by  which  corporations  may  enrich  them- 
selves at  the  expense  of  the  community; 
that  such  profits  belong  to  the  community 
at  large,  or  should  be  used  to  promote  the 
general  welfare.  Beginning  with  the  muni- 
cipilization  of  gas  and  water,  the  idea  has 
extended  to  tramways,  markets,  baths,  li- 
braries, picture  galleries,  technical  schools, 
artisans'  dwellings,  cricket  fields,  football 
grounds,  tennis  courts,  gymnasia  for  girls 
as  well  as  boys,  regulation  of  refreshment 
tariffs,  free  chairs  in  the  parks,  free  music, 
and,  last  though  not  least,  it  is  proposed  to 
municipalize  the  ginshops  and  public- 
houses. 

The  only  limit  on  the  non-profit-paying 
work  which  a  municipality  may  do  is,  it 
might  be  inferred,  the  capacity  of  the  as- 
sessment roll  and  the  amount  the  ratepayer 
is  willing  to  pay.  On  the  profit-paying 
work,  however,  the  real,  vital,  debatable 
question,  which  the  growth  of  the  municipal 
idea  or  municipal  spirit  is  forcing  to  the 
front,  is :  How  far  can  municipalities  go  in 
this  direction  without  undermining  the 
whole  fabric  of  free  competition?  This  is 
one  of  the  vital  points  of  the  whole  subject. 
If  the  state  or  city  taxes  away  one  after  an- 
other of  the  opportunities  for  the  profitable 
employment  of  private  capital  and  brains 
the  logical  result  is  that  other  occupations 

30 


become  over-crowded,  the  struggle  for  ex- 
istence gets  harder,  and  an  increasing  num- 
ber of  persons  must  come  upon  the  state 
or  city  for  support.  The  state's  function  is 
to  give  every  man  an  opportunity  to  do 
business,  under  a  stable  government.  It 
ought  not  to  diminish  his  opportunities  for 
using  his  capital  and  his  abilities.  In  thus 
becoming  its  own  builder,  its  own  engineer, 
its  own  manufacturer,  does  a  municipality 
enter  too  much  into  direct  competition  with 
private  industries?  Does  it  undertake  work 
which  individuals  are  at  least  equally  able 
to  perform?*  If  this  be  so,  is  there  not  dan- 

*The  London  Globe,  in  an  editorial  on  "Municipal  Trad- 
ing." says: — 

"There  was  practical  wisdom  in  the  suggestion  of  one 
of  the  speakers  at  yesterday's  meeting  of  the  British 
Association  when  the  question  of  Municipal  finance  and 
trading  was  discussed.  It  was  to  the  effect  that  Municipal 
trading  should  be  left  to  do  what  it  could  best  do,  and 
that  theorists  should  generalize  after  the  practical  people 
had  settled  what  was  best  to  be  done.  Adherence  to  this 
principle  would  save  a  world  of  trouble,  and  would  lay 
permanently  upon  the  shelf  many  a  pernicious  fad.  Of 
course,  there  were  not  wanting  yesterday  enthusiasts  in 
favor  of  free  everything,  with  especial  reference  to  tram- 
ways, while  the  crank  who  says  profits  are  not  profits 
when  they  are  made  by  a  municipality,  but  only  a  form 
of  indirect  taxation,  aired  his  eloquence  also.  Happily, 
however,  there  was  a  strain  of  sweet  reasonableness  in 
the  discussion,  and  the  general  contention  was  the  sound 
one  that  municipalities  should  be  allowed  to  undertake 
only  that  which  they  could  do  better  than  it  could  be 
done  by  private  enterprise.  It  is  well  that  this  saving 
leaven  of  commonsense  was  allowed  to  counteract  the 
views  of  some  of  the  speakers,  who  were  clearly  inclined 
to  put  into  the  hands  of  municipal  bodies  any  kind  of 
trading  the  latter  might  care  to  undertake.  Whatever  ab- 
stract resolution  a  body  like  the  British  Association 
might  pass,  the  notion  of  extending  the  trading  powers 
of  County  Councils  and  other  governing  bodies  is  not 
likely  to  gain  favor.  In  the  matter  of  direct  employment 
of  labor  we  have  already  been  permitted  a  glance  at  the 
kind  of  evil  likely  to  ensue  on  the  endowment  of  local 
governing  bodies  with  extended  powers,  and  the  result 
is  not  encouraging  to  the  advocates  of  such  extension. 
Apart  from  this  consideration,  however,  the  trading  as- 
sociations which  we  in  the  metropolis  are  accustomed  to 
call  co-operative  have  done,  and  are  doing,  quite  enough 
to  ruin  the  large  class  of  retail  tradesmen — a  valuable 
section  of  the  community  which  we  can  ill  afford  to 
spare — without  the  added  influence  of  municipal  bodies." 

31 


ger  that  those  of  us  who  applaud  the  tram- 
way enterprise  of  Glasgow,  the  real  estate 
scheme  of  Birmingham,  the  municipal  tene- 
ments of  Liverpool,  the  hydraulic  power 
and  ship  canal  venture  of  Manchester,  the 
abolition  of  slums  in  Bradford,  and  the 
municipal  achievement  of  Leeds,  will  ul- 
timately find  enterprises  other  than  those 
in  the  present  catalogue  taken  up  by 
municipalities?  The  question  then  arises, 
to  what  extent  is  it  safe  to  trust  municipali- 
ties in  this  direction?  Hon.  John  Boyd 
Thatcher,  mayor  of  Albany,  has  said : — 

"If  the  city  may  do  those  things  for  the  indi- 
vidual which  he  cannot  do  for  himself,  may  it  do 
for  him  those  things  which  he  finds  it  inconven- 
ient to  do  for  himself?  If  it  may  care  for  his  safe- 
ty and  his  health,  may  it  also  care  for  his  morals 
and  his  comforts?  If  it  may  build  him  an  academy 
to  educate  a  sound  mind,  may  it  build  him  a  gym- 
nasium to  develop  a  sound  body?  If  it  build  a 
gymnasium  to  train  his  muscles,  may  it  erect  an 
arena  to  test  his  prowess?  If  it  publish  police 
rules  and  regulations  for  his  conduct,  may  it  es- 
tablish an  ethical  college  to  teach  him  the  founda- 
tion of  obligation?  If  it  may  teach  him  ethics, 
may  it  teach  him  religion?  And  may  all  these 
things  be  done  at  public  expense?  Here  our  ves- 
sel breaks  from  its  moorings  and  drifts  toward 
the  beautiful  but  dangerous  coast  of  paternal  gov- 
ernment." 

It  has  undoubtedly  been  shown  that  the 
experience  of  many  cities  has  proven  be- 
yond a  doubt  that  the  municipal  ownership 
and  management  of  transportation  lines, 
water-works,  lighting  works,  markets, 
docks  and  other  works  rendering  common 
public  service  may  be  of  immediate  advan- 
tage to  the  public  under  some  conditions. 
But  is  this  advantage  reaped  at  the  expense 

32 


of  the  future?  Do  not  the  economic  under- 
takings of  government  only  emphasize  the 
failure  of  government  to  govern?  These 
are  social  questions,  and  must  be  answered 
by  the  sovereign  body  in  each  country  of 
the  world. 

In  brief,  is  the  state  to  be  supreme?  That, 
after  all,  is  the  vital  question  before  the 
country  today.  Herbert  Spencer,  looking 
out  over  the  civilized  world  with  the  clear 
eye  of  a  trained  observer,  declared  the  ten- 
dency of  nineteenth  century  thought  to  be 
in  the  direction  of  a  Socialized  Government, 
remarking  incidentally : — 

"Every  additional  state  interference  strength- 
ens the  tacit  assumption  that  it  is  the  duty  of  the 
state  to  deal  with  all  evils  and  secure  all  bene- 
fits. Increasing  power  of  a  growing  administra- 
tive organization  is  accompanied  by  decreasing 
pcwer  of  the  rest  of  society  to  resist  its  further 
growth  and  control.  The  people  at  large,  led  to 
look  on  benefits  received  through  public  agen- 
cies as  gratis  benefits,  have  their  hopes  continual- 
ly excited  by  the  prospects  of  more.  A  spreading 
education,  furthering  the  diffusion  of  pleasing  er- 
rors rather  than  of  stern  truths,  renders  such 
hopes  both  stronger  and  more  general.  Worse 
still,  such  hopes  are  ministered  to  by  candidates 
lor  public  favor  by  countenancing  them.  The 
current  assumption  is  that  there  should  be  no  suf- 
fering and  that  society  is  to  blame  for  that  which 
exists." 


When  you  open  up  these  questions  you 
touch  upon  broader  problems  than  I  am 
capable  of  discussing.  On  the  question  it- 
self in  hand,  of  how  far  we  can  go  with 
municipal  operation,  there  is  a  wide  diver- 
gence of  opinion  in  the  United  States. 
There  are  strong  advocates  of  municipali- 

31 


zation,  favoring  almost  any  sacrifice  for  the 
purpose  of  improving  municipal  life,  en- 
thusiastic believers  in  municipal  ownership 
of  anything  and  everything, — in  Great  Brit- 
ain,— who  emphatically  say  that  such  a 
policy  is  mistaken  when  it  is  proposed  to 
introduce  the  ownership  and  operation  of 
similar  undertakings  into  the  cities  of  the 
United  States.  Attention  is  called  to  a  re- 
cent report  made  by  a  committee  of  the 
New  York  Legislature,  after  examining 
many  expert  witnesses  and  taking  two  large 
volumes  of  testimony.  The  committee,  in 
summing  up  its  conclusions  in  relation  to 
municipal  ownership,  said  : — 


"But  few  have  advocated  the  ownership  and  op- 
eration of  railroads  by  the  cities.  The  prepon- 
derance of  testimony  taken  and  the  great  ma- 
jority of  opinion  expressed  before  this  commit- 
tee is  against  the  system  so  commonly  referred 
to  as  "municipal  ownership."  It  is  obvious  that, 
with  our  present  system  of  municipal  govern- 
ment the  ownership  and  operation  of  railroads  by 
the  cities  and  municipalities  would  have  a  tendency 
to  convert  these  enterprises  into  powerful  politi- 
cal machines,  the  result  of  which  would  be  detri- 
mental to  the  public  welfare." 


Before  that  committee  was  summoned 
Dr.  Albert  G.  Shaw,  whose  volume  on  the 
municipal  administration  of  certain  foreign 
cities  ranks  among  the  classics  on  this  sub- 
ject. Upon  the  subject  of  municipal  owner- 
ship he  gave  this  testimony  : — 


"I  have  never  dreamed  of  advocating  municipal 
ownership  in  the  city  of  New  York.  I  have  never 
thought  of  it  as  a  remedy.  I  do  believe,  if  there 
is  nothing  in  existing  charters  to  prevent  legis- 

32 


lative  remedy,  that  it  might  be  possible  to  bring 
the  whole  business  of  transit  in  the  city  of  New 
York  under  a  better  and  more  efficient  public 
supervision,  to  the  end  of  giving  us  some  relief 
here." 


On  cross-examination,  the  whole  case  of 
municipal  ownership  based  on  European 
experience  fell  to  pieces ;  for  Dr.  Shaw, 
while  taking  the  ground  that  American  cit- 
ies had  perhaps  been  unwise  in  not  valuing 
more  highly  the  privileges  they  had  con- 
ferred upon  companies,  substantially  took 
the  ground  that  comparisons  between 
European  and  American  cities  for  elucidat- 
ing these  problems  were  of  little  value.  Dr. 
Shaw  said : — 


"I  recognize,  on  the  other  hand,  the  exceptional 
enterprise  of  many  of  the  American  street  rail- 
way companies,  and  the  immense  advantage  our 
communities  derive  from  such  facilities  as  they 
have;  but  I  do  not  believe  enterprise  would  have 
been  checked  if  municipal  treasurers  had  guard- 
ed financial  possibilities  a  little  bit  more  closely. 
I  think  these  are  questions  of  fact,  to  be  worked 
out  precisely  as  I  judge  your  committee  has  been 
doing,  by  getting  out  precisely  the  kind  of  facts 
they  were  obtaining  from  the  witness  who  pre- 
ceded me.  I  do  not  believe  the  conclusions  de- 
rivable from  the  experience  of  foreign  cities,  al- 
though I  have  been  interested  in  them, — but  I 
never  believed  any  experience  derived  from  them 
of  any  applicability  to  our  cities;  but  they  throw 
some  little  side  lights  that  are  interesting,  but 
conditions  differ,  but  our  heads  are  as  clear  as 
any  one's,  and  we  should  be  able  to  derive  and 
work  out  deductions  and  true  conclusions." 


The  New  York  committee  did  its  utmost 
to  secure  the  attendance  of  all 'advocates  of 

33 


municipal  ownership,  and  subpoenaed  some 
of  the  most  prominent,  Dr.  Rainsford  and 
Dr.  Lyman  Abbott,  for  example.  Neither 
of  these  gentlemen,  however,  appeared.  Yet 
I  have  already  shown  that  Dr.  Abbott  wants 
our  cities  to  absorb  all  street  railway  lines 
immediately. 

Speaking  directly  on  the  ownership  and 
operation  of  street  railways  by  cities,  the 
committee  said : — 


"We  unhesitatingly  disapprove  of  the  idea  of 
municipalities  owning  and  operating  street  rail- 
ways. There  may  be,  however,  circumstances  un- 
der which  it  is  both  feasible,  practicable  and 
economical  for  the  city  to  construct  and  own  the 
road-bed  itself,  and  permit  its  operation  by  a  pri- 
vate enterprise,  under  the  direction  and  control 
of  the  city;  but  even  that  time  is  not  yet  at  hand. 
The  street  railway  systems  of  the  state  are,  and 
for  a  period  of  five  or  six  years  have  been,  in  a 
perfect  state  of  transition." 


The  closing  paragraph  of  the  part  of  the 
report  relating  to  this  phase  of  the  subject 
is  both  unhesitating  and  conclusive  : — 


"Under  all  the  conditions  and  circumstances,  it 
would  seem  that  ownership  and  operation  of 
street  railways  by  the  municipal  authorities  is 
quite  impracticable  at  the  present  time.  As  an  ab- 
stract proposition,  we  believe  that  no  govern- 
ment, either  national,  state  or  municipal,  should 
embark  in  a  business  that  can  be  as  well  conduct- 
ed by  private  enterprise.  The  reverse  of  this 
proposition  carried  out  to  a  logical  conclusion 
would  put  all  business  enterprises  under  govern- 
mental management  and  control,  and  leave  to  no 
citizen  any  hope,  ambition  or  aspiration  beyond 
that  of  seeking  an  official  position  that  affords  a 
meager  existenre." 

34 


It  would  be  difficult  to  frame  a  more 
powerful  argument  against  so  dangerous  a 
policy  than  this  one  put  forward  by  the  New 
York  Legislative  Committee.  There  is 
such  a  thing  as  carrying  government  inter- 
ference too  far,  and  the  danger  in  all  such 
experiments  arises  from  the  fact  that  one 
step  leads  to  another.  From  municipal 
ownership  we  may  go  to  municipal  social- 
ism;  and  from  municipal  socialism  remem- 
ber that  the  distance  is  not  far  to  state  so- 
*  cialism.  Are  we  ready  for  this? 


35 


Economic  IVorks  of  Robert  P.  Porter. 


LOCAL  GOVERNMENT:  AT  HOME  AND  ABROAD.  Reprinted 
from  ''The  Princeton  Review,"  July,  1879. 

REPORT  ON  VALUATION,  TAXATION  AND  PUBLIC  INDEBT- 
EDNESS IN  THE  U.  S.  RETURNED  AT  THE  TENTH  CENSUS. 

(  1882)  by  Robert  P.  Porter,  Special  Agent. 

THE  WEST  IN  1880.  An  industrial  history  of  the  Western  States  of  the 
United  States.  630  pages,  maps  and  diagrams,  $3.  Rand,  McNally  & 
Co.,  Chicago,  1882. 

BREAD  WINNERS  ABROAD.  100  letters  from  Europe.  J.  S.  Ogilvie 
&  Co.,  New  York,  1884. 

FREE  TRADE  FOLLY.     J.  S.  Ogilvie  &  Co.,  New  York,  1886. 

COMMERCE  AND  INDUSTRIES  OF  JAPAN.  A  Report  of  investiga- 
tions made  for  the  National  Association  of  Manufacturers  of  the  United 
States,  1896. 

LIFE  OF  WILLIAM  McKINLEY,  Soldier,  Lawyer,  Statesman.  With 
biographical  sketch  of  Hon.  G.  A.  Hobart,  1896.  |i.  The  N.  G. 
Hamilton  Co.,  Cleveland,  O. 

-MUNICIPAL  OWNERSHIP  AND  OPERATION  OF  STREET 
RAILWAYS  IN  ENGLAND.  A  paper  read  before  the  Special  Com- 
mittee appointed  by  the  Governor  of  Massachusetts  to  consider  and  investigate 
the  subject  of  relations  between  Street  Railways  and  Municipal  Corporations, 
and  reprinted  from  the  report  of  the  Special  Committee.  House  Document 
No.  475.  February,  1898. 

^MUNICIPAL  OWNERSHIP  AT  HOME  AND  ABROAD.      1898. 

-"'INDUSTRIAL  CUBA.  Being  a  Study  of  Present  Commercial  and  Indus- 
trial Conditions,  with  suggestions  as  to  the  opportunities  presented  in  the 
Island  for  American  capital,  enterprise  and  labor.  62  illustrations,  and  4 
maps  8°.  438  pages,  $3.50.  1899.  G.  P.  Putnam's  Sons,  New  York. 

--VESTED  WRONGS.  An  address  read  at  the  Third  Annual  Convention 
of  the  League  of  American  Municipalities,  held  at  Syracuse,  N.  Y.,  Sep- 
tember 19-22,  1899.  25  cents. 

BOTHER  PEOPLE'S  MONEY.  Being  a  story  of  Municipal  Speculation 
and  its  Consequences.  1900.  Revised  and  reprinted  from  the  New  York 
Times,  October  31,  1899.  25  cents. 


*May  be  obtained  from  Leonard  Darbyshire,  100  Broadway,  New  York. 


AN  INITIAL  FINE  OF  25  CENTS 

OVERDUE. 


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